Music-sharing verdict a milestone for record labels

The recording industry on Thursday won the largest judgment so far against consumers who illegally download music over the Internet when a federal jury ordered a 30-year-old Minnesota woman to pay $222,000 for copyright infringement.

The victory could embolden the industry in its four-year legal campaign against piracy at a time when illegal sharing of music online is exploding and dramatically reducing music sales.

The decision by the jury in a federal district court in Duluth, Minn., against Jammie Thomas, an Indian reservation employee, is the first case of its type to come to trial. The verdict could convince others accused of pirating music to settle their cases.

The Record Industry Assn. of America, which represents the six music labels that brought the case, has brought 26,000 lawsuits against individuals for copying or letting others copy songs online. More than 10,000 of these cases have been settled, with defendants typically paying less than $5,000.

Despite years of litigation by the major record labels since file-sharing computer programs began spreading with the advent of Napster in 1999, illegal downloads are 10 times as common as legal digital sales and are still growing at 60% a year, said Russ Crupnick of market researcher NPD Group.

“The landscape is still very much what it was three or four years ago,” said Eric Garland, chief executive of the piracy-tracking firm BigChampagne. “It’s still a one-horse race, and piracy is the lead horse.”

The Record Industry Assn. said the contest would be even more lopsided if it stopped suing. Most Americans would acknowledge today that sharing music files over the Internet is illegal, reversing poll findings from four years ago.

Thomas became the first of the accused to bring a civil case to trial. The verdict could discourage others like her from taking a chance that the industry couldn’t prove they were guilty.

Thomas, a single mother of two, testified this week that she had not used the Kazaa online service for swapping music with strangers. But evidence showed that a Kazaa user named “tereastarr” had offered up 1,700 songs, and that Thomas went by the same name on other online destinations.

In addition, her Internet service provider said it had assigned Thomas the numeric Internet address that on Feb. 21, 2005, had connected to Kazaa.

Copyright law sets a range of $750 to $30,000 per infringement for awarding damages in such cases, or up to $150,000 if the violation is found to have been “willful.” Jurors ruled that Thomas’ infringement was willful, awarding damages of $9,250 for each of the 24 songs targeted in the case.

Some people following the case said the jury had taken a middle course between the most lenient and the most punitive options.

Thomas and her attorney had no immediate comment.

But the recording industry association was ebullient. “We welcome the jury’s decision,” the RIAA said in a statement. “The law here is clear, as are the consequences for breaking it.”

The record labels that sued Thomas included Arista Records, Capitol Records Inc., Interscope Records, Sony BMG, UMG Recordings Inc. and Warner Bros. Records Inc.

The RIAA has shut down some of the world’s biggest file-sharing operations, including Napster and Grokster, only to see others take their place.

The verdict against Thomas came more than four years after the recording industry launched its legal onslaught in September 2003 with lawsuits against 261 people -- including at least two dozen filed in Los Angeles. Twelve-year-old Brianna Lahara of New York became the first of those accused file-sharers to settle, agreeing to pay the recording industry $2,000 and to issue a public apology for downloading songs such as “If You’re Happy and You Know It” and the theme to the television show “Family Matters.”

In a few cases, the RIAA has backed off after realizing it had accused an innocent party.

On occasion, parents have been dropped from a suit and their children added after it emerged that they were the ones using the family computer at the times in question.

Music industry executives privately acknowledged that the Thomas verdict would do nothing to stem the tide of stealing. If anything, they said, such cases are a continuing distraction from the real task at hand, which is to increase legal sales, especially online.

“You can’t stomp it out. People are going to get it one way or another,” said a senior executive at a major label who said he’d be fired if his name were printed.

The industry is desperately trying to preserve the sale of music in forms consumers are increasingly rejecting, such as CDs and digital tracks that come with restrictions on how many times they can be copied or on which devices they can be played.

“Eventually we will all have to go MP3,” said the executive, referring to the most common format of digital music. MP3s can be played on any device, and no software restricts them from being copied.

Two of the four remaining major record companies, Universal Music Group and EMI Group, began selling MP3 versions of their songs this year, and the others are expected to follow by the end of 2008.

“I see more and more legal services these days,” said Karlheinz Brandenburg, one the principal engineers who developed the MP3 format at a German consortium, the Fraunhofer Institute. “As the offerings get more active, the piracy will come down.”

In addition to selling MP3s and protected songs through Apple Inc.’s iTunes electronic store, the labels are making more deals to share advertising revenue with websites that feature their songs.

But the lawsuits, experts said, aren’t changing the marketplace.

“It’s not helping their cause. It’s like prosecuting marijuana users,” said Bob Lefsetz, who writes a music industry newsletter that reaches tens of thousands.

At best, Lefsetz said, the fear of being unlucky enough to be caught is deterring the casual user, who isn’t buying CDs anyway -- just surfing online for what’s available free.

“They need to move to the future,” he said of the record companies, perhaps by pushing inexpensive subscriptions to vast digital catalogs.

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joseph.menn@latimes.com